Ensuring customers are not subject to unnecessary recovery action, additional costs or hardship

Gwyn Worth made this Freedom of Information request to East Cambridgeshire District Council

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Dear East Cambridgeshire District Council,

A council taxpayer who owes more than just the current year's liability runs the risk of incurring additional recovery costs through a further application for a liability order if payments which are intended for the current year's liability are allocated by the council's computer to the previous year's liability. This would most likely happen where a non specific payment is made and the computer software is set to automatically allocate these payments to the oldest year's debt.

Councils computer systems have the necessary flexibility to be set to allow non specific payments to be allocated to the arrears or the current year's liability.

I understand that the majority of billing authorities have their computer software set to ensure that their customers are not subject to unnecessary recovery action, additional costs or hardship, i.e. so non specific payments are allocated to the current year's liability.

How does East Cambridgeshire District Council have its computer software set to deal with non specific payments. Current or oldest year's liability?

Yours faithfully,

Gwyn Worth

foi, East Cambridgeshire District Council

AUTOMATED MESSAGE We acknowledge receipt of this email and your request
will be dealt with accordingly. The Council have 20 working days to comply
with requests for information under the Freedom of Information Act 2000
and Environmental Information Regulations 2004. Please note if your email
is not a request for information, this will not fall within the statutory
time limit but will be dealt with by the relevant department. Mary Cooper
Information and Legal Support Officer 01353 665555
[email address] www.eastcambs.gov.uk East Cambridgeshire
District Council, The Grange, Nutholt Lane, Ely, Cambs CB7 4EE

Dear East Cambridgeshire District Council,

Response to this request is delayed. By law, East Cambridgeshire District Council should normally have responded promptly and by 29 November 2017

Yours faithfully,

Gwyn Worth

foi, East Cambridgeshire District Council

AUTOMATED MESSAGE We acknowledge receipt of this email and your request
will be dealt with accordingly. The Council have 20 working days to comply
with requests for information under the Freedom of Information Act 2000
and Environmental Information Regulations 2004. Please note if your email
is not a request for information, this will not fall within the statutory
time limit but will be dealt with by the relevant department. Mary Cooper
Information and Legal Support Officer 01353 665555
[email address] www.eastcambs.gov.uk East Cambridgeshire
District Council, The Grange, Nutholt Lane, Ely, Cambs CB7 4EE

Ian Smith, East Cambridgeshire District Council

1 Attachment

Hi Gwyn

Please find attached my response to your FOI request.

Thanks
Ian Smith
Finance Manager
East Cambridgeshire District Council

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Dear Ian Smith,

Thank you for stating that 'the East Cambridgeshire system is set so that unmatched payments go to the oldest debt'.

Would you please confirm whether or not any measures are in place to check that allocating an unmatched payment to the oldest debt in these circumstances would have the consequences of putting the current year's liability also in arrears, and if so, in accordance with R. v Miskin Lower Justices [1953] 1 Q.B. 533, whether the payment would be moved in respect of the current year's account to avoid unnecessary recovery action, additional costs etc.?
Yours sincerely,

Gwyn Worth

Ian Smith, East Cambridgeshire District Council

Hi

 

Our software has a complex payment matching routine which looks at the
payments to try and find a match as one value, as multiple values of the
amounts due, payment arrangement instalments, combinations of current year
instalments and payment arrangements and multiples thereof in an attempt
to establish which debt(s) the payment should be allocated to.  So these
unallocated payments are not 'obviously relating to a specific liability'
as referred to in the case law that you quote. 

 

Are you making the assumption that by allocating the payment made to
arrears that their current year would always fall into arrears? Customers
may infact just be up to date with current year instalments and just
paying some additional monies to reduce their arrears balance.

 

If unallocated payments were routinely set against current year debt, but
were intended as payment on arrears, it could result in the recovery of
the arrears escalating to a more serious level which may incur additional
costs such as enforcement agents or further recovery action.  So putting
the payment against current year could have a much more severe consequence
for the customer than putting it against arrears.

 

Thanks Ian

 

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Dear Ian Smith,

Re; "Are you making the assumption that by allocating the payment made to arrears that their current year would always fall into arrears? Customers may in fact just be up to date with current year instalments and just paying some additional monies to reduce their arrears balance."

No

Please see comments below in relation to R v Miskin Lower Justices (1953):

It was held in R v Miskin Lower Justices, that where an amount obviously relates to a specific liability, it would be an unwarranted assumption to allocate the payment elsewhere.

If no instruction is given at the time of payment, then the council has a duty to allocate payment to the account which it is most beneficial to the debtor to reduce. That would be in the majority of cases the current liability if the consequences of allocating payment to the arrears meant that the customer was subject to unnecessary recovery action, additional costs etc.

I understand by the council indicating that there are no measures in place to ensure that unspecified payments are allocated to the account which it is least burdensome for the debtor that the laws surrounding the appropriation of payments are not being complied with. If the laws of appropriation were being complied with, an unmatched payment allocated to the oldest debt (having the consequences of putting the current year's liability also in arrears) would be reallocated to the current year's liability on account of the circumstances implying that this was the debtor's intention (least burdensome for the debtor).

If it appears I have misunderstood anything from what I have stated above I would appreciate if you would correct me.

Yours sincerely,

Gwyn Worth

Ian Smith, East Cambridgeshire District Council

Hi Gwyn

 

Sorry, but I think there is little further I can add.

 

In my opinion, we are adhering to the case law by ensuring, the best we
can, that cash allocations are input in a way that has the least
detrimental impact on the customer.

 

Thanks Ian

 

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Dear Ian Smith,

Thank you for clarifying your response. It is evident that the overall approach complies with appropriation principles, i.e. the circumstances are evaluated and payment allocated in the best interests of the customer.

Yours sincerely,

Gwyn Worth